In recent news, the third round of Corps Commander-level talks was held between India and China. During these discussions, the two sides emphasised expedited, phased, and step-wise de-escalation in areas close to the Line of Actual Control (LAC) in Ladakh as a key priority.
Background on the India-China Confrontations
The previous two rounds of talks centred on India’s demand for a restoration of the status quo as it existed before the standoff commenced in May 2020. Trouble originally arose when Indian and Chinese troops had a skirmish at Pangong Tso in Ladakh on May 5th and 6th. The first round of talks that took place on June 6th, 2020, was followed by clashes in Galwan Valley (Ladakh) resulting in the death of 20 Indian soldiers and an undisclosed number of casualties on the Chinese side. There hasn’t been any instance of firing on the LAC since 1975, despite disagreements over alignment leading to frequent standoffs.
India’s Response to The Standoff
India has reacted militarily and economically to this conflict. It has deployed additional divisions, tanks, and artillery across the LAC, matching Chinese deployments. India has also approved the purchase of 33 Russian fighter jets and upgrades to 59 warplanes, costing Rs. 18,148 crores. Economically, India has banned 59 apps, including popular Chinese-origin ones such as TikTok, ShareIt, UCBrowser, and Weibo, citing “emergent nature of threats” from mobile applications.
Economic Implications of the Conflict
India’s trade deficit with China fell to $48.66 billion in 2019-20 owing to a decline in imports. A dip in Foreign Direct Investment (FDI) from China in India from $229 million in 2018-19 to $163.78 million in 2019-20 was also noted. This reduction followed the Indian government’s decision to tighten FDI norms for countries sharing land borders with India, necessitating government approval. However, border tensions and the Covid-19 pandemic have highlighted India’s economic dependencies on China in several critical sectors.
China’s Reaction to the Conflict
China views the app ban as “a deliberate interference in practical cooperation” and has issued warnings of potential economic repercussions. These could affect outbound Chinese investment into India.
Reasons Behind China’s Increased Deployment at LAC
Several factors contribute to the increased Chinese deployment at the LAC. Notably, this includes India’s decision to strengthen its border infrastructure and the country’s tilt towards the United States amid US-China tensions. Additionally, China views India’s assertions regarding Gilgit-Baltistan as an implicit attack on the China-Pakistan Economic Corridor, China’s flagship programme.
About Line of Actual Control (LAC)
The LAC is a demarcation line that separates Indian-controlled territory from Chinese-controlled territory. It is distinct from the Line of Control (LoC) with Pakistan, which emerged from the 1948 ceasefire line negotiated by the UN after the Kashmir War. The LAC is not formally agreed upon or delineated, making it a contentious point in the ongoing discussions.
Disagreements Over LAC
India’s claim line differs from that of the LAC as shown in the official boundary marked on maps released by the Survey of India, including Aksai Chin, currently occupied by China. Meanwhile, China mostly regards the LAC as corresponding to its claim line but claims the entirety of Arunachal Pradesh as South Tibet in the eastern sector.
Border Negotiations and the Way Forward
Various attempts have been made to resolve the border issue. These include the Indian Prime Minister’s visit to China in 2003, which led to the agreement on appointing Special Representatives (SRs), and in April 2005, there was an agreement on political parameters and principles underpinning negotiations. Despite these efforts, however, tensions have persisted due to differences in perception about the LAC.
In the current scenario, restoring the status quo at the border is India’s priority. This requires a display of military strength at the border by standing up to Chinese aggression. Simultaneously, diplomatic work is needed to make it clear to China that its intervention will lead to heavy costs across all spheres of the relationship.
India cannot afford to sever all its economic links with the world’s second-largest economy, even in the digital space. However, through initiatives like Atmanirbhar Bharat Abhiyan, India can try to replace Chinese products with domestic ones in sectors where possible and boost its economic relations with other countries.